https://seekingalpha.com/article/4291424-splunk-cash-flow-problem"Splunk reported a strong Q2 earnings with revenue and EPS above expectations, led by strong cloud growth and operating margin expansion.Management reduced their cash flow guidance for the year due to a few moving parts including the recent acquisition of SignalFX.Valuation appears pretty attractive at under 6x FY21 revenue, despite the company continuing to grow revenue over 30% with strong margin expansion.....Splunk is a great long-term play on big data and the transition to the cloud with the company continuing to demonstrate strong trends this past quarter. The SignalFX acquisition will add additional application performance monitoring capabilities to Splunk's already rather impressive portfolio of services. However, the pullback in the stock was largely due to management reducing operating cash flow guidance from +$250 million to a -$300 million loss....... The stock remains at a premium valuation and rightfully so. If investors were willing to pay nearly 8x forward revenue a few weeks ago, the current valuation of under 7x forward revenue seems more than reasonable..."

https://www.fool.com/investing/2019/11/22/...splunk-jumped-today.aspx"Splunk reported third-quarter revenue of $626.3 million, up 30.2% year over year and $21.1 million higher than the average analyst estimate. Software revenue was up 40% to $454 million. Non-GAAP (adjusted) earnings per share came in at $0.58, up from $0.38 in the prior-year period and $0.04 better than analysts were expecting....."

One big winner among tech stocks over the past five trading days was data analytics solutions provider Splunk (NASDAQ:SPLK). Posting a solid, estimates-trouncing quarter will do that to a stock.

Late in the week, Splunk released its Q3 of fiscal 2020 earnings, which topped analyst expectations not only for this quarter, but also for Q4. Revenue came in at $626 million, which was up by 30% on a year-over-year basis. Non-GAAP (adjusted) net profit was just over $91 million ($0.58 per share) for a sturdy 58% improvement....Splunk's robust growth is an encouraging mix of both organic revenue improvement, and smart, complementary acquisitions. A shift toward recurring revenue also contributed. Investors like the recurring variety, as it makes future results a bit more predictable and tends to bring in more cash over the long term.Splunk is well-positioned for more growth as enterprise clients require deeper and more useful means of sifting through increasingly higher piles of data. Although the company's nearly 18% rise in share price over the week might give some pause, the stock remains cheap given the company's still-strong potential. Investors should consider buying this stock.

in 2023https://www.fool.com/investing/2019/12/03/...ned-244-in-november.aspx"...From negative operating cash flow to $1 billion Despite these solid top-line results, management expects negative operating cash flow of about $300 million this fiscal year. In contrast, the company had posted positive operating cash flow over the last several years.

This operating cash flow deterioration isn't worrying, though. Splunk has shifted from a perpetual license model, which consists of receiving immediate up-front cash, to a ratable model where the company gets annual smaller payments. And since its average contract lasts about three years , this transition will have a negative impact on the company's operating cash flow during that time frame. But management expects operating cash flow to grow to $1 billion by fiscal 2023, when the billing situation normalizes."

"Throwing growth into reverseThere's no doubt Splunk's business is growing. Even in the second quarter, when it caused Wall Street bulls to get wobbly, revenue grew 33% to $517 million, well ahead of analyst forecasts of $488 million. It followed that up in the third quarter as revenue rose another 30% year over year to $626 million, and again ahead of projections of a $600 million gain.

Splunk is forecast to grow 26% in the fourth quarter to a consensus $783 million, while management has offered conservative guidance of $780 million. It's worth noting that the data analytics specialist handily surpasses its own guidance on a routine basis.

But it was Splunk's sudden reversal on OCF for fiscal 2020, which ends at the end of this month, that originally caused consternation. It had reported $296 million in OCF at the end of fiscal 2019 and had forecast $350 million this year. yBut in the second quarter, it surprised everyone by saying it now expected the year to end with OCF of negative $300 million, a $650 million reversal from just six months prior.

Even from the first quarter's outlook, where Splunk had eased back guidance to positive OCF of $250 million, it still caught everyone by surprise that things looked bad all of a sudden. But management did have a seemingly valid explanation for the change, though it took the company three more months to reassure everyone that $1 billion in operating cash flow was still an attainable goal.As mentioned earlier, Splunk is changing its business model, or rather how it bills customers for its business. Beforehand, it offered perpetual licenses for its software-as-a-service technology, having customers pay up front for the software license with the right to use it indefinitely. But now it's changing to a subscription-based model, billing customers for the license that allows the software to be used for a specific length of time....."

Market research firm TechNavio estimates that spending on data center construction could increase at an annual rate of 10% through 2024.According to another estimate, cloud computing demand is expected to increase at an annual pace of 12.5% through 2021. Software-as-a-service (SaaS) solutions are expected to account for a lion's share of this growth.

This is why investors should be looking at companies providing cloud services and data center equipment in these times. NVIDIA (NASDAQ:NVDA) and Twilio (NYSE:TWLO) are two tech stocks to watch as they stand to win big from more capable data centers and the widespread adoption of cloud computing in a post-pandemic world....NVIDIA's data center looked set for a breakout performance in 2020 thanks to the growing demand for artificial intelligence (AI) applications and the company's partnerships with key data center operators across the globe.So it wasn't surprising to see NVIDIA's data center business record terrific annual growth of nearly 80% in its recently reported fiscal first quarter that ended April 26...More specifically, NVIDIA claims that the A100 data center GPU is three to six times faster than the V100 Tesla card during AI training workloads. ..."